Cus - Project Import - TI 9801 - Ceiling of 10% of the value of the capital goods does not govern import of raw material for setting up of plant: CESTAT
By TIOL News Service
MUMBAI, SEP 13, 2017: THE Customs Tariff Item 9801 description reads -
ALL ITEMS OF MACHINERY INCLUDING PRIME MOVERS, INSTRUMENTS,APPARATUS AND APPLIANCES, CONTROL GEAR AND TRANSMISSION EQUIPMENT, AUXILIARY EQUIPMENT (INCLUDING THOSE REQUIRED FOR RESEARCH AND DEVELOPMENT PURPOSES,TESTING AND QUALITY CONTROL), AS WELL AS ALL COMPONENTS (WHETHER FINISHED OR NOT) OR RAW MATERIALS FOR THE MANUFACTURE OF THE AFORESAID ITEMS AND THEIR COMPONENTS, REQUIRED FOR THE INITIAL SETTING UP OF A UNIT, OR THE SUBSTANTIAL EXPANSION OF AN EXISTING UNIT, OF A SPECIFIED : (1) INDUSTRIAL PLANT, (2) IRRIGATION PROJECT, (3) POWER PROJECT, (4) MINING PROJECT, (5) PROJECT FOR THE EXPLORATION FOR OIL OR OTHER MINERALS, AND (6) SUCH OTHER PROJECTS AS THE CENTRAL GOVERNMENT MAY,HAVING REGARD TO THE ECONOMIC DEVELOPMENT OF THE COUNTRY NOTIFY IN THE OFFICIAL GAZETTE IN THIS BEHALF; AND SPARE PARTS, OTHER RAW MATERIALS (INCLUDING SEMI-FINISHED MATERIAL) OR CONSUMABLE STORES NOT EXCEEDING 10% OF THE VALUE OF THE GOODS SPECIFIED ABOVE PROVIDED THAT SUCH SPARE PARTS, RAW MATERIALS OR CONSUMABLE STORES ARE ESSENTIALFOR THEMAINTENANCE OF THE PLANT OR PROJECT MENTIONED IN (1) TO (6) ABOVE
Both sides are in controversy on the point whether for setting up of a new industrial plant requiring certain raw materials can be imported subject to ceiling of 10% of the value of the capital goods imported.
The Member (Judicial) writing for the Bench in a terse order observed -
"…When the Tariff item 9801 is read in respect of Project Import under chapter 98, it provides for grant of duty incentive in two different situations. The first situation is setting up of a plant and the second situation is maintenance of the plant. Appellant's case is setting up of the plant which is not governed by ceiling of 10% of the value of the capital goods. Therefore, the value of raw material imported by the appellant shall not be governed by the ceiling prescribed for the second category of the entry i.e. maintenance."
The appeal was allowed.